The case of CXS V Maidstone and Tunbridge Wells NHS Trust [2023] EWCH 14 (KB) explored opposing applications, one for costs management and the other for additional payments on account of costs where the claim involved a minor. The full judgment can be viewed here; CXS v Maidstone and Tunbridge Wells NHS Trust [2023] EWHC 14 (KB) (12 January 2023) (bailii.org)
Background
The case involves a minor (age 7) who suffered a hypoxic brain injury at birth and has since neem diagnosed with cerebral palsy. A claim was brought by her father (Litigation Friend) in March 2029 with a full admission of liability by the Defendant 10 days later. An order was made for judgment against the Defendant with an amount to be assessed if not agreed; in June 2020, the claim was stayed until 5 September 2022, with a further stay granted at the CMC (and agreed between the parties) until 6 September 2027.
Medical evidence has been obtained, the Claimant has entered mainstream school (a year behind) with significant support, the Claimant and her family have moved to a new rental property to assist her motability and it has been determined that the Claimant’s neuropsychological profile “is therefore complex and there is great uncertainty as to how her disabilities will play out in the context of her life until her brain has fully developed. Interim payments on account of damages totalling £950,000 have been made by the Defendant to date.” (para 12).
Issues for consideration
A CMC in December 2022 raised two issues for determination following applications made by both parties;
1. Claimant’s application for a further interim payment on account of costs
2. Defendant’s application for a costs management order
Claimant’s Position
In respect of payments on account of costs, a total of £480,000 had been paid with an additional request for £325,000 – the Claimant’s application has been opposed. In determining whether to make an order for an interim payment, the “established principles” were considered in order to determine a reasonable sum; Master Cook relied upon Excaliber Ventures LLC v Texas Keystone [2015] EWHC 566 (Comm) where Christopher Clarke LJ said;
- “It is clear that the question, at any rate now, is what is a “reasonable sum on account of costs”. It may be that in any given case the only amount that it is reasonable to award is the irreducible minimum. I do not, however, accept that that means that “irreducible minimum” is the test. …
- What is a reasonable amount will depend on the circumstances, the chief of which is that there will, by definition, have been no detailed assessment and thus an element of uncertainty, the extent of which may differ widely from case to case as to what will be allowed on detailed assessment. Any sum will have to be an estimate. A reasonable sum would often be one that was an estimate of the likely level of recovery subject, as the costs claimants accept, to an appropriate margin to allow for error in the estimation. This can be done by taking the lowest figure in a likely range or making a deduction from a single estimated figure or perhaps from the lowest figure in the range if the range itself is not very broad.
- In determining whether to order any payment and its amount, account needs to be taken of all relevant factors including the likelihood (if it can be assessed) of the claimants being awarded the costs that they seek or a lesser and if so what proportion of them; the difficulty, if any, that may be faced in recovering those costs; the likelihood of a successful appeal; the means of the parties; the imminence of any assessment; any relevant delay and whether the paying party will have any difficulty in recovery in the case of any overpayment.”
The Claimant has presented a short form bill in the sum of £1,155,262.00 in support of incurred costs (£281,000 being VAT and disbursements). The overall sum being sought would bring interim payments to just below 70% of the costs incurred.
The Claimant relied upon the likely value of the case and specifically features such as the needs of the Claimant to have a number of specialists involved during her lifetime and the subsequent costs, need for suitable housing and equipment, significant need for ongoing care for life and the anticipated long length of anticipated life expectancy; it proposed potential value between £20 to £40 million was placed on the claim. The extent of medical expert input was outlined in support. In addition, Mr Hutton KC for the Claimant outlined further complexities;
- Trust between the parties and the medical and legal team
- Difficulties the Litigation Friend/parents of the Claimant have had in relation to trusting professionals around care, equipment, therapies and accommodation, efforts by the Claimant’s solicitor to delegate tasks whilst maintaining the trust of the Claimant’s parents
- Maintaining the trust and support between the Claimant’s family and medical providers/MDT with the Claimant’s solicitor being instrumental in ensuring those relationships continue
- The Claimant’s parents have needed additional time to discuss and make decisions given the nature and difficulty of the situation they are posed with
- Ultimately additional challenges have arisen due to those involved and the situation being “fragile and unpredictable” going forward.
Turning to the level of costs claimed; Mr Hutton outlined in addition to the level of interim sought, that the costs would continue to be incurred over months and years with “an almost inevitable costs order in the Claimant’s favour, the that the likelihood for repayment of any overpayment of costs paid on account is truly miniscule or immaterial.”
Defendant’s Position
For the Defendant, Mr Readhead KC raised concern at the level of costs already incurred, highlightiing that the claim had already been stayed, and raised issue with the hourly rate of £530 (£157 above the GHR for the relevant location) resulting in “manifestly excessive” costs to date. He continued that if a further stay was granted it would be reasonable to require costs budgeting to allow for a costs management order (CMO) to be put in place to comply with the overriding objective for proportionate costs. It was accepted that it is not the usual course for CMO to be made in claims involving minors, but the Defendant argued CPR 3.13(3) and relied on CPR 3.13(4);
(3) The court—
(a) may, on its own initiative or on application, order the parties to file and exchange costs budgets in a case where the parties are not otherwise required by this Section to do so;
(b) shall (other than in an exceptional case) make an order to file and exchange costs budgets if all parties consent to an application for such an order.
(4) The court may, in a substantial case, direct that budgets are to be limited in the first instance to part only of the proceedings and extended later to cover the whole proceedings
The Defendant sought a CMO limited to the remaining stay (6 September 2027) and opposed any further interim payments on account of costs. The Claimant accepted that the Court had discretion to apply a CMO, but strongly objected to the reasonableness of doing so in this matter.
Conclusion
It was accepted that the costs incurred to date were high when comparing with other similar cases (CMO’s often being awarded around £750,000-£1.5m) but it was equally accepted that this case was different in respect of the timeframes between issue and the first CCMC (4 years’ in this case, with a further 5 years’ before the next CMC). It was accepted also that the Claimant’s solicitor had to undertake considerable work in relation to the MDT and management of the payments on account of damages.
The Defendant’s concerns were summarised by Master Cook as;
“The work reasonably undertaken by BBK in relation to providing legal advice and in relation to the general management of the claim and the application of interim funds must however been seen in the context that there is a Deputy and a Case Manager in place. The disparity between the cost of disbursements £92,000 and profit costs of £874,262 down to 6 November 2022 is clearly the root of the Defendant’s concern that that the case is not being conducted in a proportionate manner. In particular, I accept the Defendant has a genuine concern and may well be able to argue in due course that much of the solicitors’ time recorded in relation to experts and in liaising with CXS’s parents may not be reasonably incurred. However the fact remains, both parties accept that a substantial amount of work has had to be undertaken by BBK in connection with this claim and that acceptance is reflected in the amount of the voluntary payments made on account of costs down to 30 August 2022 in the sum of £480,000.” (Para 35)
Master Cook concluded that it would not be right to make a CMO limited to the period of the stay as suggested by the Defendant; reference was made the White Book and the rules governing exemptions from CMO’s; in short, that cases involving minors take many years’ to establish the full extent of injuries and prognosis. Master Cook determined that this case fell well within the type of cases that the CPR intended to exempt from costs management and in his judgment, there was not:
“sufficient certainty to enable sensible assumptions to be made concerning the extent of the work required in the duration of the stay to provide the basis for a budget. If incorrect assumptions are made there is the potential for further applications to vary the budget which would just add another layer of cost to the proceedings, alternatively a budget may be set which is artificially high. I consider the Defendant’s concerns about the level of incurred costs are adequately catered for by the requirement for a detailed assessment at the conclusion of the claim.” (Para 37)
Master Cook therefore confirmed that costs management was not going to be ordered, and instead turned to quantifying the appropriate level of interim payment on account of costs; Master Cook considered the Claimant’s position – largely arguing reasonableness on the basis of a percentage, against the Defendant’s neutral viewpoint which Master Cook took to mean that the Defendant felt the level of interims already paid, were reasonable. Master Cook did not accept that the percentage application was appropriate given his concerns with the level of costs incurred to date and he was unable to ascertain periods of costs incurred from the short form bill. On that basis, he considered
1. Interim payments made to date
2. Entire period from the date of entering judgment
3. The uncertainties and unusual features of the case
Master Cook did not accept that any consideration of likely future costs could be made. A further £80,000 interim payment on account of costs was awarded bringing total interim payments to £560,000; a sum that was considered reasonable in the circumstances. Interestingly however, Master Cook did “observe that this would seem to be an appropriate case for the parties to produce costs estimates in advance of the CMC which will take place in September 2027”.
Considerations
The CPR and intentions of exemptions from cost budgeting remain clear in the Court’s eyes. In addition, the lack of certainty as to the direction of the case coupled with the protection afforded to the Defendant by way of the detailed assessment procedure (CPR 46.4(2)(b)) preventing recovery of excessive costs by the Claimant, satisfies the Court enough that a costs management order is not suitable in claims of this nature.
This continues to support the position that costs budgeting adds additional layers of costs, and where there are so many unknowns in a claim, even partial costs budgeting may not be seen as a reasonable or proportionate step in a claim. However, the suggestion that parties produce estimates in 2027, supports that there does need to be an element of cost discussions prior to conclusion of a case – the suggestion here being more informal than the usual costs management, but still providing some guidance for the parties involved as to the anticipated level of costs at that stage.
Overall, this is a sensible decision, however, could feed into the ongoing discussions currently within costs, regarding the future of costs budgeting generally and the costs associated.
Kate Benn
Business & Litigation Manager
Senior Costs Draftsman
01480 220808